ETFs
Bitcoin ETF (BTC) purchases for pension funds are just beginning
The first quarter addition of two spot bitcoin exchange-traded funds (ETFs) to Wisconsin’s retirement plan portfolio was likely just the beginning of the U.S. state’s investment in crypto, said David Krause, a professor of finance at Marquette University, based in Milwaukee.
SWIB purchased shares of BlackRock’s iShares Bitcoin Trust (IBIT) and Grayscale’s Bitcoin Trust (GBTC), valued at $164 million as of March 31, a filing with the U.S. Securities and Exchange Commission showed -United in May.
The news shocked the industry because large institutions, especially pensions, do not normally invest in young ETFs like spot Bitcoin ETFs, but the state investment board has already been ahead of the curve. game, Krause said in an interview with PBS Wisconsin.
“The Wisconsin Investment Council has always been innovative,” he said. “It’s a fully funded pension fund, so in a way they have the luxury of being able to invest for the long term. They don’t have to worry as much about liquidity as, say, the Illinois state pension fund, which is only funded at 50% of its level,” he said. added.
At the end of 2023, SWIB managed approximately $156 billion in assets, according to its websitemeaning his holdings in Bitcoin ETFs were a negligible amount of around 0.1% of his portfolio.
Krause, however, said the investment was just a “toe in the water” and he expects SWIB to increase that amount and other pensions to eventually follow suit.
“I think it’s just an entry point. I think they’re doing some testing to see the public reaction as to whether or not there’s any resistance to the idea of owning this and they’re using it as a trial because it won’t really have much impact. “Substantial impact on the portfolio, until you get to maybe 1% or 2% positioning,” he said.
Nearly 500 institutional investors revealed allocations to spot bitcoin ETFs in the first three months of the year. The largest owner as of March 31 was a hedge fund Millennial Managementwhich revealed $2 billion in assets across a number of funds, or about 3% of its total assets under management.